What are Loans for People?

Wikipedia says that the loan is a type of debt. Just like other debt instruments, the loan requires the redistribution of financial assets between the lender and the borrower. In a loan, the borrower borrows an amount of money, called the principal, from the lender. The borrower is obligated to pay back the equal amount of money to the lender at a later time. The money can be paid back in regular instalments, or partial repayments. In the case of an annuity, each instalment is the same amount.
The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants.

The article talks about the following:

1. Personal Loans


2. Payday Loans


3. Consolidation Loans

What are Personal Loans?

There are two kinds of Personal Loans; the Unsecured and Secured Personal loans.
An unsecured personal loan can be very easy to obtain. The unsecured loan requires no collateral. It may not even require your credit score. Usually the amount of an unsecured loan is small which is from $100 to $500 dollars. Some lenders may require your credit score and those with a low score will usually pay higher interest rates on their loans. You can even apply for a loan online and receive information on your application almost instantly.
The secured personal loan will have a lower interest rate than that of the unsecured loan. The personal asset can back the loan as collateral and provide lenders with extra security. Lenders are more likely to give lower interest rates. With both the secured and unsecured personal loans, you will be given monthly instalments to pay back the money. If the loan is not paid back, the collateral will be collected as compensation for the lender.

What are Payday Loans?

Payday loans are possible solutions for small financial problems. Most payday loans are released within 24 hours and may even be directly deposited into your bank account. Payday loans should not be used for things that you do not need because they have very high interest rates.
The loan is a cash advance until your next payday. If you do not pay the loan when you receive your next pay check, you can extend the loan for a fee. The longer you extend the loan the more money you add to the loan that you will have to pay back to the lender. When you apply for a payday loan, you will be asked for personal information like complete name, phone number, and place of employment. Some lenders ask for copies of your last pay stubs. Take your time when searching for your lender. Some charge higher interest rates than others. If you are in a financial emergency a payday loan can be a quick fix. Just keep in mind the high interest rates and extension fees that come along with this loan.

What are Consolidation Loans?

Consolidation loans are meant for people in debt primarily because of imprudent use of credit cards. The consolidation loan helps by putting all of your debt payments into one payment. The interest rate on a consolidation loan can be lower than that of the rate on your credit cards, making the payments easier to manage. When you consider a consolidation loan, make sure that payment instalments are reasonable in comparison to your budget so that you can pay the loan off as arranged. If you are a student trying to consolidate student loans, keep in mind that the Canadian government is offering different types of aids and grants to help consolidate student’s loan payments.

Be Wise in Acquiring Loans

In Canada, there are a variety of options for those in debt and this can be done through different loan companies. Choose wisely when looking for a consolidation loan. Make sure to find one that fits your needs.
It is very difficult to be buried deep in debt so avoid loans just for the sake of having one.

References

wikipedia.org
canadianfinanceblog.com